Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/Case law/2013-14/1901

Whether benefit of notification no. 214/86-C.E. admissible if raw material supplier of job worker does not has factory?

Case:- STEMCORE ALLOYS & ISPAT LTD. VERSUS C.C. & C.EX. (A-III), HYDERABAD-III

Citation:-2013 (295) E.L.T. 588 (Tri.-Bang.)

Brief Facts:-These applications filed by the appellants seek waiver and stay in respect of the respective adjudged dues. On a perusal of the records and hearing both sides, we are of the view that the appeals filed by the applicants also can be finally disposed of at this stage. Accordingly, after dispensing with pre-deposit, we take up the appeals.

The appellant in the first appeal worked as job worker for the appel­lant in the second appeal during the material period. The former manufactured excisable goods out of the raw materials supplied by the latter and cleared such goods without payment of duty under Notification No. 214/86, dated 25-34986. The job worker's grievance is against demand of duty of Rs. 4,31,392/-, confisca­tion of goods, imposition of penalty, etc. The other party, raw material supplier, is aggrieved by denial of Cenvat credit, imposition of penalty, etc. In both the cases, the impugned demands have stemmed from a crucial fact found by the adjudicating authority which is to the effect that the raw material supplier did not have a factory.

Aggrieved by the orders of adjudication, both the parties had pre­ferred appeals to the Commissioner (Appeals) and had also filed therein applica­tions for waiver of pre-deposit under Section 35F of the Central Excise Act. The appellate authority directed them to pre-deposit 50% of the respective amounts of duty, which they did not deposit within the prescribed time. In the absence of evidence of pre-deposit, the learned Commissioner (Appeals) dismissed their appeals on the sole ground of non-compliance with Section 35F ibid. The present appeals are directed against the orders of the Appellate Commissioner.
 
Appellant Contentions:-The appellants submitted that, in the scheme of the above notification, the raw material supplier need not have a factory. The proposition is that the said scheme itself is meant for a person without factory who would like to have excisable goods manufactured through job workers.

In his rejoinder, the learned counsel has referred to a few decisions viz., Amul Industries Pvt. Ltd. v. Commissioner - 2006 (206) E.L.T. 1043 (Fri.-Mum.), S.G. Zaveri Pharmapack v. Commissioner - 2007 (217) E.L.T. 591 (Tri.-Mum.), Bata India Ltd. v. Commissioner - 2006 (199) E.L.T. 847 (Tri.-Bang.), Kay Cee Electricals v. Commissioner - 2005 (182) E.L.T. 136 (Tri.-Del.), etc. It is claimed that, in all the cited cases, the benefit of the above notification was allowed to job workers even in the absence of a factory for raw material supplier.
 
Respondent Contentions:-The learned Superintendent (AR) submitted that no prima facie case for allowing benefit under Notification no. 214/86-C.E. to job-worker for clearance of goods without payment of duty as under said notification raw material supply mandatorily required to have a factory. He also points out that, in a case of another job worker of the second appellant, this Bench directed pre-deposit of 25% of the amount of duty demanded vide Stay Order No. 800/2012, dated 15-5-2012 in appeal No. E/2497/2011 (M/s. Rayalseema Steel Re-Rolling Mills (13) Ltd. v. CCE, Hyderabad-Ill).
 
Reasoning of Judgment:-After giving careful consideration to the submissions, we have not found prima facie case for the appellants for the following reasons:

a)    Notification No. 214/86-C.E. on the very face of it requires the raw material supplier to have a factory. In fact, almost all references to raw material supplier in the notification are accompanied by men­tion of factory.
b)    It is not in dispute that the second appellant (Ravi Organics Ltd.) did not have a factory as defined under Section 2(e) of the Central Excise Act during the material period.
c)    The cited decisions have been perused and it is found that, in any of those cases, there is no categorical view expressed by this Tribunal to the effect that a raw material supplier working under the scheme of the above notification need not have a factory. Therefore the re­liance placed by the learned counsel on the cited decisions is mis­placed. Before the lower appellate authority, these applicants ought to have made reasonable pre-deposits.

The Cenvat credit denied to the second appellant is to the extent of Rs. 22.6 lakhs. The learned counsel has submitted that, as they had supplied the finished goods to SEZ units during the material period, they claimed refund of the unutilized Cenvat credit to the extent of Rs. 19 lakhs. It is submitted that this refund claim was rejected by the original authority and its decision was upheld by the Commissioner (Appeals) and further that the appeal filed against the Ap­pellate Commissioner's order is pending before this Tribunal. Obviously, in that case, there is no stay application. In the facts and circumstances of this case, we are inclined to proceed on the premise that M/s. Ravi Organics Ltd. are entitled to the above refund. If that be so, in the instant case, they should pre-deposit the differential amount viz. Rs. 3/- lakhs (Rs. 22 lakhs less Rs. 19 lakhs). They shall pre-deposit this amount of Rs. 3,00,000/- (Rupees Three Lakhs Only) with the Commissioner (Appeals) to enable him to dispose of their case on merits.

Insofar as the job worker is concerned, we have the benefit of Stay Order No. 800/2012, dated 15-5-2012 which was passed by this Bench against another similarly situated job worker viz. Rayalseema Steel Re-Rolling Mills (P) Ltd. We had asked them to pre-deposit 25% of the total amount of duty demanded Consistently, we direct the job worker before us (Stemcore Alloys and Ispat Li­mited) to pre-deposit an amount of Rs. 1,00,000/- (Rupees One Latch Only) with the lower appellate authority to enable it to dispose of their appeals on merits.
Both the appellants shall pre-deposits the respective amounts within six weeks from today and report compliance to the Commissioner (Appeals) forthwith, whereupon the latter shall dispose of the appeals (filed against order-in-original) on merits without insisting on any further pre-deposit and in accordance with law, after giving the parties a reasonable opportunity of being heard.
Both the appeals stand allowed by way of remand.
 
Decision:-Appeal allowed by way of remand.

Comment:-The essence of this case is that to get the benefit under notification no. 214/86-C.E. one of the pre-condition is that the raw material supplier should have a factory. As the condition of the notification was not fulfilled in the instant case, prima facie the case was found to be against the assessee and pre-deposit was ordered. 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com